Retail opportunity: Turn transactional messages into selling machines

In the current economy, many online retailers are turning to e-mail marketing to boost sales. However, many retailers are failing to take advantage of an existing e-mail communication channel with their customers —transactional messages — to upsell and cross-sell.

Nearly all online retailers use transactional e-mail messages – order confirmations, shipping alerts and the like. However, Return Path recently studied 45 online retailers' use of transactional messages, and we discovered a number of missed opportunities. Only 40% of the companies we studied included promotional content in their transactional messages, and of that group, just a handful targeted these promotions based on the purchase that was made. Why are so many online retailers not taking advantage of the sales potential of transactional messages?

We think there are two primary reasons. One is CAN-SPAM concerns: Transactional messages are exempt from the CAN-SPAM law. Many retailers are nervous that if they include offers in transactional messages that they will invite CAN-SPAM scrutiny. The other is technical issues: For many online retailers, transactional messages are sent from an e-mail system completely separate from the system used for promotional emails.

Of course, we've always counseled marketers to comply, in every way, with CAN-SPAM. However, that does not preclude transactional messages from including promotional content. The primary purpose of the e-mail must remain transactional — very clearly communicating the message that the order is confirmed, the merchandise has shipped, etc. As long as that remains front and center and the subject line reflects the transactional nature of the e-mail, then it's fine for the messages to also include some promotional offers.

The technical issues that many retailers face are real, but they aren't insurmountable. If a retailer works with completely separate systems, then it may make sense to start with doing simple, generic promotions to dip a toe into the water and get a benchmark for what kinds of sales these messages can generate. It's also worth making a few phone calls to your service providers. You may find that they can work together or can offer simple workarounds to make the systems synch up. Many e-mail service providers have enhanced their systems in the last several years to make this sort of integration possible. They may also offer custom upgrade solutions to facilitate integration.

Of course if you are ready to get really serious about using transactional messages to sell, then your promotions have to be more relevant. Our study found that of the retailers who do include promotional content, 73% aren't currently targeting that content.

When a customer makes a purchase, a retailer is given three key pieces of data that can be used for sending targeted content: location, type of item (category, size, color) and price. This valuable information can be used to upsell related items. Taking that leap to targeting promotions may be a big one, requiring further system integration and technical resources.

How do you make the case for it? One way is to use data from your targeted promotional messages. If your targeted promotional messages get a lift by a factor of 10 vs. generic messages, then take the amount of sales you generate off your current transactional messages and multiply it by 10. That kind of return should get you a good hearing with the executive suite.